we'll talk to the owner of the only rare earth mining facility in north america it's thursday, may 30, 2019. "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. u.s. equity futures are indicated higher after weakness in recent sessions dow futures indicated up by 60 points after closing down by 221 points yesterday s&p futures are up by 8 points s&p yesterday was down by 19 points the nasdaq up by 25 after losing 60 points yesterday. right now you are looking at the markets off of their record highs. major averages the dow is down 6.8% from its record high. s&p down by 5.8%

the nasdaq off by 7.7% let's look at what happened overnight in asia. the nikkei was down by a third of a percentage point. hang seng down by 0.4% shanghai down by 0.3%. if you look at what's happening in the early trading in europe you will see there are green arrows across the board there. the dax is the biggest gainer of the three major averages up by 0.6% stocks are higher in italy and in spain with stocks in spain up by almost 1% look at treasury yields here in the united states. this is the issue that is confounding the markets. ten-year note trading at 2.267%. yesterday we saw yields hitting their lowest levels since september of 2017 across much of the complex for seven, ten, and 30-year treasury yields. the trade tensions continue to dominate the headlines and are weighing on investor sentiment. the latest u.s. commerce

department saying they will impose anti-dumping duties on chinese mattresses and stainless steel beer kegs after finding those products were being dumped in the u.s. at less than fair market value the duties on chinese made kegs could be as high as 79%, as much as 1,731% on mattresses. the rhetoric from china continuing to heat up on all of this speaking to reporters in beijing, china's foreign minister saying deliberately provoking a trade dispute was a form of naked economic terrorism. ray dalio says he views the u.s. china conflict as more than a trade war. dalio says increasing export controls could turn into a more serious export embargo war

he says the u.s. crackdown on huaweiamounts to weaponizing export controls. we'll talk about dalio's comments and the potential use of rare earth metals as a trade weapon we'll do that in a little bit. >> someone -- i saw a weird article about we should ban electric cars so we're vulnerable to a rare earth -- >> because of the batteries. >> yes >> and you saw the pimco ceo, it's not big gros, he said credit market risk is at an all-time high. scott mather >> front page"new york times" today sees high likelihood of a recession over the next three to five years that's different than this year. we have the riskiest credit market we've had the increased size, lower quality and lack of liquidity in

corporate bond markets are all a red flag he's not talking about solvers and what we have here. >> there's a big debate on whethers too too much corporate debt or not. declining credit quality, all late cycle credit behavior we began to see in 2005 and 2006. bob iger says he is confident the $2 billion investment in its new "star wars" theme park will drive interest in the brand including movie sales and the new streaming service. in an interview with julia boorstin, iger said disney is not too reliant on any one franchise. >> if you look at the profile of the company, we're basking in "avengers: endgame," the marvel property we have "toy story" coming out,

lion king. there's so much going on that people are interested in yes, we have a lot to riding on "star wars." we have a diversity of characters and franchises. i don't think we're reliant too heavily on any one of them we like them all. ahead of last night's grand opening of galaxy's edge attraction at disneyland, this is in anaheim. disneyland disney world version of the new attraction opens in orlando in august much more from the iger interview later this morning i was looking for something to watch the other day, i saw "lion king" i said what do you think there was a no i considered it. that was scary the music. >> i could watch it. >> i love it all >> pretty good there are some troubling scenes. >> dark undertones

>> run over by that stampede, his son watches. >> separately iger told reuters it would be difficult to keep filming in georgia if a new abortion law takes effect. disney filmed blockbuster movies in the state including "black panther" and "avengers: endgame. iger said i think many people who work for us would not want to work there and we would have to heed their wishes earlier this week netflix said they would rethink their film and television production in georgia if the law goes into effect it would work with groups fighting the law in u.s. courts. the company shoots major series in the state including "stranger things" and "ozark." louisiana lawmakers approved stricter limits on abortion and the democrat governor is expected to sign that. reed hastings -- or netflix had given 1$150 million to missouri

gop politicians that wrote the abortion law there >>ly i will be down in georgia tomorrow >> that gets us into the culture wars that will get us into the culture wars, which i hoped not to get into. >> it has an economic effect >> i know they do. it brings us into -- you know, we all have our own viewpoints on where we. i try not to be quite as knee jerk as maybe you would think, but it's just hard for us as a business network to go there unless you can stay totally detached in terms of your own views. >> yeah. >> i don't -- you know, you like the -- the -- just being a great

company, satisfying customers, and, you know, and shareholder value, creating jobs, that's not good enough. you have to get involved with -- what about guns? what about abortion? what about virtue signaling across the board for these companies to make them feel like they're good corporate citizens. they put it in the teleprompter. i had to read it >> let me read this one for you. nancy pelosi said facebook's refusal to take down altered videos of her demonstrated how the social network contributed to misinformation. >> this is false they know that this is false we have decided all along, facebook were unwittingly exploited by the russians. i think wittingly. right now they're willing to put

something on that they know to be false >> facebook has been under fire for acting too slowly to police harmful content. the altered videos of pelosi first appeared online last week and spread online and youtube. in one edited version her speech was slowed down to make her appear drunk facebook allowed it to remain on sites saying it reduced distribution of the video and labeled a fact check box that labeled it as false. >> you know, we have -- it will be confusing for viewers santelli -- >> in the house. >> is is he here >> he's here he will be on the set and santoli will be on the set >> i think i can tell them apart. >> that's true ♪ >> i think santelli and liesman will be on the set at the same

time >> okay. >> i'm trying to figure something out. >> call security >> trying to figure out a way to stir them up >> yes >> coming up, we'll talk about the week's big rate shock and what it means for your money rick santelli is in the house. he will join us next as we head to a break here's a look at the biggest premarket winners and losers in the dow. the ai i need? it's gotta scale across my business. starting here, in procurement, helping us find the right suppliers. then here in logistic, to avoid disruptions! here in sales. even here! i'm talking about ai we can build to work... here, predicting trends.

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no matter what you trade, at fidelity [ slurps ] gwho's a good boy? it's me. me, me, me. hey guys! you're gonna want to get in on this. i know how to those guys in here. let's pause the internet on their devices. wohhh? huhhhh? [ grumbling ]

all: sausages! mmm, mmmm. bon appetite. make time for what matters. pause your wifi with xfinity xfi and see the secret life of pets 2 in theaters. let's discuss the current state of the market but really talk about the bond market amid renewed concerns that the bond market could be signaling a recession. joining us is kevin giddis and rick santelli, on-air editor for cnbc business. these guys are like -- we showed a shot of them getting their act together, getting their stories straight will you guys agree? were you talking about the cubs or were you talking about -- >> we were talking about past and present fed chairmen >> you were? >> yes >> did you see -- either of you see the pimco comments yesterday?

riskiest credit market ever from scott mather he's talking about leverage and corporates, underwriting standards are down >> what do they expect the central bank put a big sign in arrows, eat here. eat at joe's they made everybody bite into the risk, now risk is here corporate securities, what is the ecb doing? they like to buy them. everything going on with regard to risk, i think central banks think it's more palatable. >> you think this is similar to '06 and '05? >> i don't think it's anywhere near that. >> he don't think so either. i think if you look at even the riskiest part of that market, the leverage loan index is in the high 90s you have to go back to the '50s and '60s to get anywhere near

'06 and '07. we're all worried about credit spreads, but the fundamentals of this still look strong >> rick, you know, over the years it looked like the fed was behind the curve in normalizing rates from emergency levels back to what we think of as normal. now we have a whole new notion of what eke lib brquailibrium ie is it still central bankers gaming the system? do we deserve to hear about global inflation >> i have to give the central bank credit. nine quarter point tightenings how many has the ecb done? how aggressive is the bank of japan? >> you want to go up >> i think it's right. the biggest mistake the fed made was starting late. janet yellen was late to the partiful >> you don't think they can

raise rates anymore? >> i think it's comfortable here i think we're close to what's perceived as neutral >> you're blaming it on central banks overseas, not on global inflation or actual fundamentals >> i think all central banks made plenty of mistakes. overseas, the other central banks right now are -- >> what can they do now? >> they can't do much now. >> they have entitlement states, this euro system without a central fess cal fiscal authority. >> and they have those wonderful bureaucrats unelected. >> farage may take care of that. >> i think so. >> why are there negative rates in europe? >> that's the trend for the next

five, ten years i think. >> negative rates? >> yeah. europe runs on germany if germany is slowing, the rest of europe will slow with it. we're not there yet in terms of where we could go with rates and the negative territory some 13 trillion now of the world's interest rates are negative what the fed missed most is inflation, raising rates seven times to where we are now. i think them being quiet and not talking about anything being transitory is good for the market >> no one, rick, thought 226 here at the beginning of 2000. >> i did i came on this show in january >> based on what >> inflation to me the trade is the cherry on the top. to me, it's always been an inflation story or lack of inflation story. the fed missed that call the market missed that call.

the bond market got on it early, this is a result of that friday's number, the core pce, if we get something in 1.5, 1.6 rate -- >> how did you know inflation would stay low based on productivity or innovation we have china? internet >> from the sharing economy, which is uber and airbnb to the fact that the baby boomers are crowding out the millennials for jobs that they'll take for lower wages. >> they pay rent >> it suppresses other prices, like hotel prices. this is one thing we were talking about, it's not your father's economy or inflation. i think the fed is based on things that happened in the past trying to set policy for the future. >> the rest of the market seems to think the fed will cut rates as soon as september a month ago i would have

disagreed with that. equity traders are petrified what rates are doing for obvious reasons, it's possible i'm still thinking they will be pay he shent fortient for a whi. you get close to the two-year and ten-yearing tho yooeten-yeat driven rates i think you'll be on the set the same time as liesman later >> it's early in the morning i haven't had much coffee. steve is safe for a few more hours. >> this is around 8:00 what's the most infuriating thing you think he's come up with eventually? listening to his reports >> you are such an instigator. >> that you haven't -- >> no, no. i think recently it's been kind of market driven he's paid attention. ha >> okay.

it's cable, that's what it is. coming up, rick santelli -- great minds. rick will be back for a face-to-face debate with steve liesman. you want him over there? >> i think he needs to be right next to me. coming up, be nice to your uber driver or risk getting banned i think they'll have a report, the first report on this ♪ i know how difficult it can be to find the right father's day gift. but you can't go wrong at dick's sporting goods.

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♪ welcome back to "squawk box. it's more important than ever to be nice to your uber driver. the ridesharing company announcing they will begin banning riders with low user ratings. they say low-rated riders would have several chances to improve their rating before being banned the app would prompt users with tips on how to improve things they should already be doing like being polite to their driver, avoid leaving a mess in the vehicle and not encouraging the driver to not break traffic laws having sat with dara and we talked about this and our ratings, a couple other things, he said wear a seat belt sometimes they'll ding you for that if you slam the door hard.

sometimes drivers don't like that if you're going to get on the phone, alert them in advance say hey, i have to make a quick phone call or is it okay if i make a phone call. polite version of it tipping does not impact your rating >> right >> no. no the way this system works, you rate -- they rate you before they find out about tips >> really? >> yes >> that's dangerous intel for you to have. >> that shouldn't happen if you want to know what's the ultimate trick, at the end of the drive, if you say something nice to them and say hey, i'm going to give you five stars, they often will trade you back >> so you boost each other >> so if -- >> that's just like don't be a jerk all those things. >> sure. >> clean up your mess. >> the phone call is something, i didn't think you would need to clear that >> i didn't know you had to clear it either.

he said that's the polite thing to do. it's different in didn't markets. >> you know how bad credit falls off, have your -- your excuse -- >> your last 500 rides. >> your excuse for your 3 rateding -- >> we had a situation a couple years ago. >> has that fallen off >> are you 3.5 >> i'm in the 4s if you're in the 3s, they will kick you off the other thing you should know, it defaults on the screen for the driver to a 5. so when the ride is over, they rate you, it defaults to five for them >> unless you ding them. >> they have to ding you they have to legitimately -- it takes work otherwise they would have to swipe this thing across. >> we don't want this to go too

far. there is the customer, there is the person providing the service. >> people are so rude. >> you want -- >> being told you have to pick up your garbage? >> you want the soup nazi in your cab >> i've seen how some people behave, yes. when you have to be telling them to pick up your garbage. >> going down the line to get the soup george asked a question. >> can i have some bread >> do you want that? oh, my god, out! >> i think of a driver as constantly downgrading their passengers, that would also be tough for them as well >> i don't have an account, i don't use it, but there's times where you think someone is coming and then they canceled. what's that? >> you can't ding them for that. there's no way to do that. >> it's infuriating. golly, i hope my uber driver is happy and all. but i'm the customer >> uber is doing this because they have to make their drivers

happy. they're not being paid the way they used to be paid >> do i have to be nice to my cabbie going through the city? >> yes you should be nice to everyone. >> yes >> the customer is not always right anymore? that's the society we're in now. >> there's certain services -- >> we all should be tiptoeing away can i curse in the uber car or no >> oh. >> are there ears -- >> could they stop you >> no. i think -- when we go -- it's usually everybody is involved, my feeling is they're hugging the guy by the end of the ride thank you. we know -- >> what's the rating >> i don't know what our rating is >> my guess is it's pretty good. >> you know blake, she hugged you yesterday. >> i know. whaent wasn't it lovely >> i told her not to >> she loves me. i love her back. >> she hugs everybody. >> you can't weaponize your

kids. >> yeah, i can. >> now i lost my train of thought. i was going to give you another suggestion on how to improve the uber thing have you -- this is for you. you use uber for your daughter probably >> yeah. >> one thing you don't want to do is sometimes people do an uber ride for somebody else, for a friend then the friend gets in the car -- >> acts like a jerk. >> who knows what. what you can now do is actually pay for the ride and even order the ride and there's a way to set it up for another person as long as they have a separate phone number so that you don't -- >> if you're a jerk you say you're ordering it for somebody el and put it on your second phone line >> that would be a clever idea i don't know how that would work >> someone already sent me the soup nazi video. he was so funny. any way. i'm not going to do that

you know, mutual, andrew >> yep >> the driver has to be -- he or she has been doing this all day long working for peanuts. >> uber has to do this to make sure the drivers are feeling love from somewhere. >> a lot of things have to go right for this company to make money. this should be an interesting report today. bids to have lunch with warren buffett reached a record high with the annual charity auction not complete the latest bid is just over 3$35 million. last year's winning bid was 3$33 million. 100% of the winning bid will be dona donated to glide right now that bid is just above 3$3.5 million. when we come back, forget

elon musk's twitter account. the latest market moving accounts have been coming from leaked emails from musk to tesla employees. right now as we head to break, a look at yesterday's s&p 500 winners and losers through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from finding out what's selling best... to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition.

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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box. we've been watching u.s. equity futures. at this hour we're looking at green arrows dow futures indicated up by 64 points nasdaq futures indicated up by 27 the s&p 500 up by 8.

we should maybe point out that yesterday the s&p 500 did slide below its 200-day moving average. 276 is that number closed above that at 2873. after it fell below 2800, people said that could be a technical level to watch stocks to watch, pvh is cutting its annual profit forecast the owner of the calvin klein, tommy hilfiger and other clothing brands is citing slow growth tariffs on chinese imports are also a concern as pvh sources a majority of its products from china. elon musk says tesla has a lot of catching up to do to achieve a record quarter in a leaked email to employees, musk says while demand is strong he'll start holding calls with delivery teams every two days to know what's needed to accelerate our rate in a separate email last week musk said tesla produced an average of 900 model 3 cars per day.

unclear whether this newer email really changes the prior emails projection in terms of this idea that they'll hit a record number this quarter a bit unclear. this also suggests that there's a way around the twitter situation. >> can't tweet material information but you can email it sonafeld doesn't like it >> true believers. >> musketeers. >> that's good >> musketeers. they are linked. the tesla lovers and the musk lovers changing the world satellites >> i said it a million times

you love the man, he can be a great genius of our time, yet his business can be challenged >> i got it. and the flame thrower, that disappointed you >> i did. dennis muhlenberg personality apologized to the victims of the two 737 mac crashes, but says he will continue to lead the company >> i do personally apologize to the families we feel terrible about these accidents. we apologize for what happened we are sorry for the loss of lives in both accidents. that will never change that will always be with us. i can tell you it affects me directly as a leader of this company. we clearly fell short. the implementation of this angle of attack disagree alert was a mistake. we did not implement it properly we're confident in the

fundamental safety of the airplane >> you would put your family on a 737 max? >> without hesitation. and when asked if he considered resigning, muilenburg said it is important that he continued to lead the company. >> i wish we showed the company that norah o'donnell asked of him, it's as if he didn't understand or was a robot. she said would you personally apologize to some of the families as in like would you call them or send them a note or do something personally to apologize? he said i personally -- he said it three times or twice, it was like yes, i personally apologize to these families. as if he's saying it it infuriated me it was as if he didn't really understand -- not just the question, but the intent of the issue, which is are you genuinely sorry and are you

willing to communicate that and articulate to the families clearly he's not or it seems like he isn't. >> he's just conflating saying i'm personally ahehe apologizing to them right now. the question is will you individually apologize >> yes i don't know if that's because he wanted to dodge the question, didn't understand the question it came off more poorly than the clip we showed. coming up, we told you about pvh shares falling today, our next guest has a retail name that he says is one to buy and later we'll talk to the owner of the only rare earth mine in north america, play that '60s classic again find out what it's like to be caught up in the escalating trade war threat you're watching "squawk box" on cnbc [knocking]

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right now it's time for today's squawk picks joining us to talk about a few names to watch is chris cordero. thanks for being here today. >> thank you >> you have some picks that have

a consumer angle to them while a lot of people are saying retail is just a place to run and hide from, you like a retailer you like target. >> i like target i don't think retail is a place to run and hide from we still need to go to the big box retailers and fill up a cart of junk that we never knew we needed if you can buy a retailer at a good valuation like target, patient paint a nice dividend yield administration i think they figured out how to do box and online >> is that the key, you need both strategies? >> yes, you can't be one or the other. consumers want the brand of both sometimes just online doesn't do it for you sometimes you need to run out on a saturday morning and get stuff. >> we were talking about this this morning on makeup i used to go to target and spend

400 bucks on stuff i didn't need you don't do that online >> that's where target has the edge when you go online, you're a sniper you know what you want, you will get it when you go through a big box retailer, you see stuff that you want right then. your kids are throwing stuff in the cart as well so you end up spending more money when you go to a retail presence you also like royal dutch shell despite the fact that oil prices are under pressure >> you want an energy company that can survive during low energy prices. that's -- shell is one of those. shell also pace a nice dividend yield. with target and shell that bay good dividend yields, as interest rates started to decline, these dividend yields will be more attractive. investors will start rotating back into higher dividend

yielding stocks. either of these stocks, how do they fair if we do head into recession? if you look at the ten-year or oil prices, if you look at the latest economic news, if you look at corporate bonds, maybe you started to worry about the idea of a downturn coming. what happens to these two stocks >> target is a good example. if you think about a downturn company. if a downturn is coming, you look for places to get a bargain. target is a place to get barg n bargains in a downturn we think about the last recession the last recession was horrible. we have not had a normal recession in a long time in a normal recession, target will do well >> the other stock you like is alphabet you say you are conflicted about recommending it. >> i'm conflicted. at heart i'm a value guy

when i look at companies and i know in a balanced portfolio, i need to add technology stocks to it i have to pick one that has a franchise and sells at a good price. that's alphabet. they -- the placement of online advertising, they got that end figured out. it's a good technology stock to own. >> you would not recommend the other f.a.n.g. stocks? >> the one i would stay away the most from is amazon. i think at some point they will come up and say when will they be profitable? they had a nice quarter last year, but when will they really good there >> thanks for coming in. >> thank you >> when we return, there's only one mine in north america for rare earth metals. right now it's caught in the trade war cross hairs. we'll talk to the owner next. and a quick check of what's happening in european markets right now.

green arrows across the board. "squawk box" will be right back. moving is hard.

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post calling rare earth metals a critical import that american companies need from china. it accounts for roughly one tenth of the rare earth mining and right now it is caught in the middle of this trade war, both in good and bad ways. we'll talk about it right now. the founder and ceo of j.h.l. capital group the controlling owner of that mine so when you came and sat down, we said, is this a lucky moment for you? >> yeah, i think so. i think it's a stroke of luck in the medium and long-term but in the short-term we have a lot of challenges and we need to -- >> the challenge for you guys being while you mine here, you're exporting to china? >> yes so we bought the facility out of the bankruptcy in 2017 at the time it had eight employees and was in care maintenance. last two years we have been doing a ramp up in two stages. the last two years we hired 200 people and created 200 american hard-working jobs. the first stage of the process

which is done that we're creating a rare earth concentrate. ship 100% of that to china over the next year, by some time next year, we will be making separated rare earth products at that point we'll be fully self sufficient from chie nand one of the major producers in the world. the products that we sell are tariffed what we sell to china is tariffed interestingly, even though we are tariffed, the u.s. does not have a tariff on rare earths there's a unilateral tariff on us. >> why do you sell everything to china? i don't understand there's such a need for it here. we're importing 80% of what we use from china. >> yeah. it's a great question. there's no refining capacity other than one facility in malaysia has environmental challenges there are no refining facilities in the world outside of china because of any scale. >> because it's such a heavy pollution -- >> yes the industry has been taken over -- mountain pass, the site that we acquired out of bankruptcy was from the 1960s

through the '90s was the leading rare earth producer in the world. but essentially in china they have a lot less stringent environmental controls so about 20 years ago they took over the industry and it's sort of been that way since and so our goal, the good news is that our predecessors that allowed us to buy this out of bankruptcy because they had some challenges one good thing they did was they spent $1.7 billion building a state of the art environmentally friendly facility. >> how challenges would it be for you to scale up from where you are now or for other competitors to try to mine here in the united states in the future if we get into a full blown trade war? >> so there's a lot of political headline talk about other sites. the thing about rare earth mining, it's really a chemical process. rare earths are everywhere but to have enough concentration in the ore body to make it economic it's very rare and so, our ore body is like the saudi arabia of ore bodies

we have a very high concentration of rare earth in a nonradio active way. it's essentially the ore body in the world. just to give you a data point. our rare earth concentration is about little over 8% these other ore bodies in the u.s. are sub 1%. it's uneconomical. >> if you were in charge of policy for the united states when it comes to rare earth mining and want to set a strategy for the u.s. so we could ever be independent of china, is that a complete inpossibility. >> we're doing it and going to do it as private market participant. we're talking to the government and hoping they'll help us but we're not counting on it we're it if we can't be economic, there is no hope for the u.s. industry and i would add, by the way, i just think this is remarkable and a credit to the 200 americans out there working right now, is that even with the challenges that we have, the higher environmental standards, our facility operates in the state of california.

you can imagine what that's like versus inner mongolia. but even with the environmental higher standards and the 25% tariff, we are slightly profitable today >> so these aren't isotopes. we showed what they are. what's radioactive >> everything else that's around the rare earth elements? >> so our ore body is not, but there are other ore bodies elsewhere in the world ore elements show up -- >> not rare earth elements not the ones you want but radioactive ones. >> correct it shows up -- >> you have to have an ore body -- >> we're blessed with the best ore body in the world. >> interesting. >> and so we've got that good fortune. >> but the environmental problems are that it's like strip money you have to take so much earth to get such a small amount that you devastate the area >> essentially in most -- in other places in the world, there's a lot of water and reagents and in china very often a lot of acidthat's used that historically has been dumped

into lakes. >> to get the 1% >> yeah. we think this is a big deal. a lot of people who have their -- we think it's a big deal, the environmental aspect of this. but we're going to compete on a low-cost producer basis. >> people don't know that. it's all our fault that they tariff you big two hours ahead on "squawk box. our guest host for the next hour is richard fisher former dallas fed president. plus, uber's first quarterly 'lhart is after the bell wel ve you covered on what to expect. stay tuned "squawk box" returns in a moment is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives,

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wall street pointing to a higher opening following yesterday's big slide. we'll find out what's fuelling the turn around. can bitcoin get back to all-time highs the crypto king bart smith talks regulation, mobile payments and why he says it can challenge gold as a commodity. investors await uber the ride hailing giant set to report results as the second hour of "squawk box" begins right now. ♪

♪ let the good times roll >> announcer: live, from the beating heart of business, new york, this is "squawk box. good morning, everybody, welcome back to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. richard fisher in studio with us for the hour now cnbc contributor richard, good morning. >> thank you thanks for having me. >> let's look at the u.s. we can ity futures. at this hour you'll see there are green arrows across the board but we lost some of the gains we saw just a half hour ago. dow futures up 21 points down from 60 points earlier s&p up by 4 and nasdaq up by 12 points. couple big headlines to tell you. economic worries in focus right now on wall street investors looking ahead to the second reading of first quarter gdp due out in 90 minutes. con sen ses forecasts call for annual growth rate of 3% down from the original report of 3.2%

rate also, china tariffs are the other prominent wall street worry right now and they are directly impacting at least one well-known company that is pbh the company behind the tommy hilfiger and calvin klein brands cut its annual forecast. sources most of its clothing and accessories from china iconic american businesses up for sale by british owner first group says it's selling the u.s. bus line after facing pressure from shareholders over poor performance. first group has owned greyhound since 2007 they lost money last year. i did not know that. yield curve throwing off flags this week warning investors of potential economic growth fears steve liesman joins us with more on this. >> the yield curve remains inverted though it's climbed back more towards zero is it signaling a recession?

does it mean the fed is too tight? does the fed have to respond to this yield curve we have the ten year, three month, thank you very much we were down a little more towards 16 now we're at minus .95 basis points that is all of this leading the market to think the fed is going to cut and leading that it's going to cut more than it did before we're comparing the fed probabilities of a cut from the end of april to today. and you can see it's up quite a bit. we are up near 85% or something like that for the -- for richard fisher has his hands wide open saying what are you talking about? we'll see what he has to say in just a minute. near 90% or above 90% now for january. looking longer term, fed funds looks to be pricing in three rate cuts for next year. what would it take for the market to be right about the fed? the data quote looked too strong and financial conditions too accommodating for easing easing is possibility if recent weakening in manufacturing spreads to the broader economy

pantheon talking about the other side of the coin what would it talk to get trade talks going again? a rout in the stock market probably would be the single most effective way of restarting the trade talks. we very much doubt president trump has another 1,000 points off the dow. that leads me to paradox, decline in stocks would tend to make trade talks more likely and trade talks more likely which would lessen the need for rate cuts. >> i guess although it seems to me -- >> unless they're separate tracks. >> i think it's the big violent selloffs may catch the president's attention more than the slow drip we have seen of stock prices there hasn't been a day where we lost more than a couple points. >> the nice thing about -- >> let me introduce you. let's bring in our -- >> proper introduction. >> our distinguished guest because i'm going somewhere with this our distinguished guest host

former dallas fed president fisher, pulling down huge dough at a cnbc contributor. >> that's where the dough comes from. >> the reason i was going to mention that is you're not buying into a rate cut because you think things are going well. and i was going to say this, don't talk about texas because texas is not -- don't talk about your own bank account, which is obviously going very well. >> yeah. >> aren't you glad you came in >> you think this dot plot -- you think that they're just wrong, it's just wrong and richard fisher is right? >> well, first of all, rates have come down i don't understand this business the fed has to cut the fed does not determine the yield curve, markets determine the shape of the yield curve i just came back from london i met with all the largest asset managers there and they're piling into dollars, joe. unhedged which is really a change from the end of the year to the beginning of the year where they

said it's too expensive i'm going to hedge my business. >> just the best house in a bad neighborhood, that's all it? >> best looking horse in a glue factory. but we're not -- we're sectarian compared to everybody else we have nominal yields that are positive and by the way it's a self fulfilling prophesy. you pile in and look at the dollar index. >> that's the reason people are saying the fed should cut, the dollar is too strong you want to weaken the dollar. >> that's good -- my point is rates come lower because there's more demand relative to supply. >> look at the ten year. these guys are piling into the ten year. >> they're beating us in europe ever since the fed got patient, the dollar still -- the euro is 111 now. nothing has happened since the fed backed off if the fed were to cut here, it would just encourage this movement further into dollars in my view. people are hungry for some, positive, nominal yield. the rest of the world is a frightful place and people don't want to put their money into those frightful places who wants to be in europe?

where else are you going to go japan. you're not going to go to japan. only so much you can do and trade those things they're always disappointing long-term. so, i just find this interesting. the governor of federal reserve made a speech the yield curve management, she noted you can't go out much more than one to two years to affect the yield curve. the market determines the shape of the yield curve from two years on out. >> that's what rick said this morning, too. >> someone else said this? oh my gosh >> i'm not sure what europe -- i was just reading netanyahu i thought he just won. dissolve government. i looked at the eu elections and looking at the way these other countries run their governments, why don't we license out to run these constitutions, look, you can use our system over there. here is what you do. we don't -- we won't charge much for it are not these other forms of government insane? are they not insane?

>> we have a rule of law -- >> how many prime ministers -- >> that's what we were doing until a certain president decided globalization was not a good idea. we were running the world. >> why don't they just take our system and use it? >> all i can tell you, globalization is -- >> we are the sweet spot sot global economy we have positive growth. you'll focus on manufacturing. manufacturing is -- we are consumers and service driven >> it will come down a little bit. coming down a little bit there's one report -- i'm sorry to cut you off, richard. >> that's all right. you've done this for years >> i have been listening patiently. been patient there's one report i read that said they may come down more than we expect because, look, the big swing factor that caused it to be much higher in the first quarter and could cause it to be lower is inventories nobody really knows how to estimate inventories we sort of make it up. >> the build could have been because trying to get ahead. >> getting ahead of the whole china thing. >> i'm going to come back to the question here which is my report

was about this, maybe i should have been more clear, sorry. is what's driving the market now the -- what do you want to call it, the temporal issue right now of just the trade talks or is there something weaker brewing in the u.s. economy the fed needs to respond to? because if -- i think the thing the fed fears most is responding to a trade talk problem that goes away with a call from president trump to president xi. and then all of a sudden they've cut rates or this is i think legitimate question is the yield curve telling us something, is more sick about the u.s. economy -- >> that's what you're trying to figure out. >> right >> they care about the real economy. can i point out one historical fact about the yield curve the term premium is the lowest since 1961 >> explain what that is, richard. not everybody knows. >> you're not getting -- picking much up. you pointed that slight inversion. so it's the lowest since 1961.

we had a selloff in 1962 the market was done 27%. the economy was still strong the economy did not weaken you had the kennedy tax cuts and so on. >> why did it sell off >> markets sell off. sometimes it's inexplicable. the economy continued to perform. it performed for another ten years. >> that's a scary comparison. >> does the market have this wrong, richard >> is the market way ahead >> they got three cut rates built over the next year. >> we'll see the fed will always respond to the real economy they have to do it with, as you know, in advance because there's a lag for monetary policy although now you get instant response in the markets. consumer numbers look pretty darn good still. confidence looks decent. at least what we got from the reports last week. so, we're going to have to take a look here and see. they're going to have to determine whether or not the economy is actually weakening or not. i don't think the first quarter

growth numbers are going to tell you very much. they're focussed on what's going on now and how they see the future and i don't believe they're going to respond to the markets. the nice thing about this, president trump could not blame the last selloff on the fed. it was china, china, china that was his own doing maybe he'll lay off a little bit. even if he piles in on the fed, i don't think it has any influence whatsoever. >> all right we have not good note something big coming up obviously later and that is santelli meeting do you go vape together now? do you still -- >> what happens off the set, joe, is not for public consumption, you know what i'm saying >> i have to ask you the same question i asked him what was the most infuriating thing, the list is too long >> that's not what he said, joe. >> roll tape >> can you give me something that he said you've been more market -- >> you have thought that rick has been off his rocker most of the time

now, what is the most -- >> i never said that rick and i have come together. >> is there anything recently -- >> there's no reason to watch at 8:30 there's no reason. rick and i are not going to break out into violence. we have differences. you're trying too hard, joe. you're trying too hard rick stuck to his guns he's one of the few people that -- >> he said today -- >> in the wake of the president -- >> he doesn't want to go up any higher. >> look, what separates rick and i are is 50 bases points i would like to see the fed get to 3. >> that's not all, steve >> we all would like that. >> they don't have much ammo. >> rick didn't spend seven years in moscow, okay. >> where, joe, i learned more about the beauty of capitalism than you will ever know. >> that's your story have you watched "the americans" >> i have. my kids think we're the americans. >> they must. >> you know why, we talk russian with each other. >> that's terrible. >> my kids looked around in the

basement for guns we know there's secret decoders down there. yeah, they did. >> did you know that, richard? did you know that? >> yeah, yeah. >> he was good in moscow >> was bernie there? was that before? >> can i tell you what steve, the bureau chief of the new york times described me as, the only person in moscow who could write an english sentence and calculate a percentage change? >> there you go. >> have to think about that one. >> pretty cool. >> thank you >> 8:30. >> 8:30. lot more to come this morning. bitcoin. >> i want to hear your views on this one setting a one-year high. what's driving the move and how high it will go? we're close to 9,000 all over again. we'll ask the crypto king bart smith will join us in the meantime, check out european markets at this hour? you're watching "squawk box" right here on cnbc heading into retirement you want to follow your passions rather than worry about how to pay for long-term care.

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because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. welcome back to "squawk box. let's take a look at the futures this morning you're seeing that the dow futures are up but they have been losing the gains that we were witnessing earlier this morning. dow futures are up but only by 14 points. we had been up 60 points earlier. jim cramer had been tweeting earlier this morning saying with oil prices down again and pretty blah the situation in europe that he expected to see the futures turn down. right now we are still looking

at positive territory but again we lost maybe the gains that we had seen earlier s&p futures are up by 3.5 points probably worth noting that yesterday the s&p fell below 2,800. also, during the course of the trading day fell below 2776, which is the 200 day moving average. it did manage to close above that at 2783 that's an important level. there are people thinking you could see another downturn for the markets. in positive territory for the moment nasdaq indicated up by ten points after a number of well known retail stocks were battered yesterday, two more are gaining this morning dollar general beat estimates on both the top and bottom lines with same store sales rising more than expected express did post a quarterly loss but the loss was less than half of what the street has anticipated. as a result, both stocks are up this morning dollar general up by 4.6%. express shares up by 7%. ♪ coming up, it's been called

the crypto king, he has been, bart smith the faithful follower of bitcoin as the head of digital assets at susquehanna, he will join us after the break to discuss the recent move in bitcoin and the future of crypto. later, uber is set to report results for the first time as a 'lrertly traded company. wel po the results "squawk box" will be right back. ♪

welcome back to "squawk box. take a look at bitcoin all the way back to $9,000 all over again. joining us is bart smith the head of digital assets at susquehanna. good morning to you. bart, let's just start why is this happening? what's behind this move? >> yeah. so, there's a lot of drivers to the price of bitcoin, right if there's geopolitical drivers, technological, regulatory to go with investor demand so it's hard to isolate any one factor kind of within the bitcoin community, this rise over the last month i think generally is thought of to be driven by primarily three things the first is the net effect of the trade war with china and the u.s. is that the juan is hitting a six-month low. much of the rise of bitcoin in

2017 came out of asia, countries like korea and china that have capital controls and that were in many people's minds devaluing that currency and therefore bitcoin was either a hedge or just an outright way to get capital outside of that country. >> right >> i think that the second is that there's a bitcoin conference in new york called consens consensus. it's a very large conference i think going into that weekend, the price went from 6,000 to 8,000. and certainly going in and coming out of that conference is a tremendous amount of excitement about u.s. regulatory -- u.s.-regulated platforms, like the fidelity platform and the areas x platform there's a tremendous optimism about online brokages offering bitcoin to retail customers in 2019 and so no one has come out and said that openly, there's a lot of talk about that and i think people are buying bitcoin ahead

of that new investor demand. >> what kind of volume has been involved in this move and there's always an inherent skepticism if not cynicism there's manipulation in this market what do you think about both of those issues >> i will kwidty, it's hard to ascertain that number. so, i look at the regulated exchanges for real volume. if you look at the u.s. futures, futures are trading 100, $200 million a day in the most recent rally and 600 million there a day. there's where institutional investors will find liquidity. >> do you think that you can sell in size right now at price. >> absolutely. absolutely i think that there's way more liquidity in the marketplace than most people would ever need some people point to billion dollars a day of liquidity $600 million in the future is just one facet of it

there's other exchanges. yes. >> go ahead, richard >> i want to ask a basic question if you look at the volatility over time of bitcoin, there's no way you can consider it a store of value or a reliable medium exchange so, my basic question which you i'm sure have been addressing for a long time, isn't this just purely a speculative medium? is there anything else to this other than that? >> i mean, it is certainly speculative. it's risky and whether it will work depends on what it is, right is it a store value? people who would bearish would say it's too volatile. i would argue that it's kind of phase broader adoption occurred the volatility would damper, right? and some people think it's cross border remittance or the native currency of the internet can it scale to 40,000 transactions a minute like visa

and mastercard maybe. if it did that would be pretty meaningful but you know, it's risky and risk in and of itself should have returns associated with it. the question is do you understand the risk and are you taking the appropriate amount. >> bart, the other question i had was people talk about this as a store value i know we debate that issue, but if you think gold is a store value, shouldn't this operate not in tandem with gold but at the opposite ends of gold? in terms of the diversion we should see, in terms of price. >> i think replacing gold is a fairly aspirational endeavor if it were to get there, some people would argue that if you use simple math that a bitcoin could be worth $400,000 of bitcoin. so will it replace gold? i don't know what i would say is it's worth $8,700 today so people who say that it has no

value because it's not bite back by anything -- >> three months ago it was worth $3,000. >> it's what you get value is the question mark here. >> right so then, you know, i can get $8,700 worth of stuff for it today. >> right. >> and it's been around for 125 months and if you bought a bitcoin in 120 of those months you're up. so, as much as people want to say it's this risky, toxic, speculative thing, find me $135 billion asset. >> you talk about retail getting involved all over again and there were a lot of people who were burned retail if you will the first time, not even the first time around, multiple times since it's been a bit of a roller coaster across the board, are all those -- is retail really going to pile into this or is the idea you're hoping they pile in and then are they left holding the bag >> well, again, i'm not a bitcoin evangelist it's not my job to convert the

unconverted. and i'm not necessarily rooting for anything i'm a market maker i provide liquidity. i think the beautiful thing about the capital market structure is if you think bitcoin isn't worth anything, you can short it you can borrow it and sell it, sell a future and then cover later when it inevitably goes lower. i'm not making a price prognostication. i'm simply pointing out that there's a lot of optimism from people within the bitcoin community overthings that have happened in recent months and i think that's reflective in the price. >> do you think it will continue to go higher or you're not calling it one way or another? >> if people continue to buy it it will go higher. people start to sell it, it will go lower. >> speculative. >> the regulatory environment -- this is what i would say structurally 2018 was dubbed by many as the year of regulation i think many people were concerned that western economies in particular would create new poorly thought out regulation or regulation that was specifically designed to stifle the growth of

bitcoin. neither of those things happened and it seems the rhetoric coming out of most regulators in the u.s. and europe and japan is that they're going to operate within the current framework and i think people think that's a net positive for bitcoin and that's driving the price higher. >> bart, appreciate your perspective, your thoughts on all of this. thank you so very much this morning. >> thank you >> talk to you soon. when we come back, david bee yan koe, the chief investment officer at dws will join our guest host richard fisher to talk about trade war concerns and your money. look at the u.s. equity futures as we head to the break, still in the green dow futures up by 10 s&p futures up by less than 3. e sd uby 9 "squawk box" will be right back.

♪ still to come on "squawk box," stocks on track to break a four-month winning streak. we'll diswas what's moving markets. then, uber's first quarterly report since going public. what you can expect the kpaep to say in tonight's announcement. big day for facebook as it gets ready for its annual

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time now for this morning's market movers. dom chu, i'm overcome by this feeling of excitement. i think you picked some really, really good ones this time, dom. what do you got for us >> does that imply i don't always pick good ones, joe >> in this case it's an intuitive feeling. i have no idea what you're going to talk about, but these are great names you have coming up here what do you got? >> well, let's start with a great name because we're all kind of vested in this start with shares of come cast, the parent company of this network and nbc universal, news and entertainment overall. the cable and media company is hired by a percent or so, roughly 7,000 shars of premarket volume analysts have upgraded the shares to a buy rating the target price goes to 52 bucks from a prior 39. they sited comcasts smoother transition to be more of a connectivity and broad band

company versus straight video distributor. those gains about a percent in the premarket. shares of citi group are on the move 15,000 share of premarket volume upgrade to buy from neutral. $77 from a 71. the market is too pessimistic. so those shares on the move to the upside as well and we'll end with shares of apple which are up just about fractionally or so on roughly 25,000 shares of premarket volume analysts at morgan stanley cut their target price on apple to 231 from 240 they kept their overweight rating on the stock. they sited what else the risk of further restrictive trade measures and choppy trading in the stock expected overall so becky, those three names in the green on the move back over to you. >> dom, thank you very much. >> sure. >> joe was right, good lineup.

our next guest says the s&p 500 will fall about 8% from its peak this summer in light of escalated tariff concerns. david bianco guest host richard fisher is with us for this conversation. david, down 8% that's not far from where we are. we're down by 6% right now >> that's right. another few percent downward from here and i think from that point we've got better risk reward into the end of the year. but that's still assuming that we don't have any further additional tariffs in order for the s&p to rally from there. i think the existing tariffs stay with us through the rest of the year >> there were a lot of people who were talking about some technical levels that were breached yesterday the s&p fell below 2,800 round number people like to look at even below that during the intra-day trading it fell below 2776 which is the 200 day moving average. do either of those technical signals concern you? >> it's a market of stocks, but

when so those round numbers we do look at but keep in mind it's still a market of individual stocks when you have a macro issue like the trade tariffs dominating the market right now, then you can look at a higher top down level. i think the key is that the expectations for s&p earnings growth is going from mid single digit to very low single digit growth in 2019 because of this rising expectation of the existing tariffs being with us through the rest of the year so i think what you've got going on is that the s&p is adjusting to an earnings number from about 169 to about 165 for this year and investors thinking, well, is 16 1/2 a reasonable multiple for now such that maybe we get to 17 1/2, 18 in a year >> does your macro view consider that the fed will raise rates or cut rates? do you have either of that baked in >> our view and one i still feel comfortable with and of course we're monitoring this is that the fed does not cut rates this year i would go one step further although i don't want to deal

with it right this moment, we'll deal with it when we get there, i think the next move out of the fed is likely to be a hike rather than a cut but i don't think it comes until the first several months of 2020 and my view on this is that simply the fed wants to explore what the upper end range is of the neutral fed funds rate they're at neutral for now, but in maybe a year from now they would be able to go up another quarter of a point all that said, i don't think the fed gets to 3% or anything above 3% this cycle. i'm not surprised at all that the ten-year treasury yield is where it is and that we got a completely flat curve. i think it's going to be a very long lasting cycle another handful of years >> before we see a recession. >> before we see a recession, but it will be slow growth, low inflation, low real interest rates and no term premium. >> richard, i want to ask you very specific -- ask your question first and then i have a question for you. >> as far as your macro view of the markets, your forecast, does that assume a continually

strengthened dollar? >> okay. the way i think about -- if we have weaker economic growth, u.s. and worldwide likely even stronger dollar from here. but i think there's a good case to be made that provided the fed doesn't about face and cut rates significantly one would argue if they really have to cut rates don't mess around with 25 bases points if you really have to cut rates knock them down 50 right away assuming something like that doesn't occur, it's enough to keep the dollar strong >> cut 50 bases points i think they would scare the hell out of people. >> they shouldn't do such a thing unless it was really needed. >> richard, somebody on twitter wrote a really good question for you. >> my wife >> no. looking at the quantitative tightening program with just rolling off the balance sheet, they point out that there are plenty of people who think that has the net effect of being about a 25 bases point increase in rates do you think they should continue the quantitative tightening and what will the impact be?

>> first of all, if you look at the balance sheet as of last thursday you can pull it up off the web. 3.91 trillion. so that pace of pairing it back has been slowing if you look at the liability side of the balance sheet, currency and circulation, bank deposits including excess reserves, et cetera, you are not able to get the balance sheet down below 3.7 trillion or right around that territory. >> so we're almost done any way? >> we're near the end. >> then you have to consider also as mortgage-backed securities roll off, all out there pretty long right now, that will be reinvested in treasuries if you keep the balance sheet at a certain size before you talk about increasing it. so, i think there's been this talk about equivalent 25 bases point cut but that's all slowing down right now so that also adds to the stass you were talking about, david, in terms of rates being where they are for some time. >> $200 billion doesn't matter, doesn't really tighten things? >> i'll give you an example, one

to five year, 5.4 trillion outstanding. >> so no >> it sounds awful it's around a year. >> currency and circulation has still been rising despite the fed's -- >> like clock work 6% a year. >> exactly >> over 1.7 trillion. >> the other thing is i have come to think of the u.s. policy rate as essentially the interest rate paid on excess reserves to the extent the fed wants to keep interest rates as high as they are, anything artificial about interest rates how high they are they have to do that through allowing banks to deposit these excess reserves and keeping the balance sheets large. >> you're looking for markets to sell off 8% from the highs, which is not far from here so if we sell off another couple percent you would tell people to buy? >> yes, provided that we don't have further deterioration in the trade conflict now my view is that the tariffs will not be dropped after the g20 meeting but i don't expect the next round of tariffs on consumer goods to be enacted and hope to see some type of mutual

rale understanding they can say we're working at getting the tariffs down over time, 5 point increments for the next couple years. >> thank you for coming in, david. >> my pleasure. coming up when we return, what to expect from uber when it reports its results tonight. a preview straight ahead. the marriage of disney and "star wars." after five years, "star wars" galaxy edge ready to open for business anan it means for the media git d investors straight ahead. "squawk" returns in a moment father's day gift. fit but you can't go wrong at dick's sporting goods. we have gifts for every dad. if he's into boats, bikes, or camping there's plenty to choose from, including yeti. and if he likes golf he'll love the latest drivers from callaway and taylormade. plus we've got a great new selection of footwear to fit any runner and every athlete. so make it a day he'll remember with the perfect father's day gift from dick's sporting goods.

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i'll pass. uber reports its first quarterly results as a public company after the bell today we have a preview and we say results for a reason, i think, deerd ra, because we're not looking for earnings any time soon, i don't think. >> right well, this will be their first quarter ones we do have an idea what to expect there's plenty of room for some surprises. uber gave us a range in an updated s 1 telling investors to expect losses, revenue of 3 to $3.1 billion so essentially slowing revenue growth, more of the mixture that has not impressed public markets so far as you said, joe, very far away from actual earnings analysts will be looking to other metrics to judge the trajectory, gross bookings will

give them an idea of uber's total market remember lyft eliminated this metric from its first quarter report and that did not go over well expect uber to disclose their's. other key metrics like contribution margin will tell us about the core platform efficiency, take rate could give us clues as to how much uber is foregoing to get more market and how far away it is from ever seeing those actual earnings, from ever being profitable because uber listed less than 25 days ago it's still in a quiet period we're unlikely to get guidance aside from the numbers we'll get first earnings call with analysts he has to reassure investors that shares are still trading below its ipo price, continued spend on promotions and subsidies and that ride sharing model's path to profitability. guys, back over to you. >> thank you for that. i want to talk more about what investors could expect, joining us is tom white and rhett wallace.

thank you both for being here. i have mispronounced triten too many times what is the one metric you're actually going to look at this afternoon? >> for me, it's revenue growth i think this company is trying to direct investors to focus on gross billings growth, the total transaction value that runs on the platform, what's interesting over the last five, six quarters there's been a wide divergence which gross billings is growing and how much is falling down to revenue. so, that's really the main focus for us i think longer term investors will probably focus and prioritize gross billings and ubers ability to with stand competitive pressure over time and build this really large business but we would like to see the revenue trends better than they've been. >> you're not expecting them to be any better? >> well, as deirdra mentioned, the first quarter unaudited in the s 1 uber eats is rebounding

but ride sharing is still decelerating so very hard to say. and that's a big reason why we have a neutral on the stock. >> where do you land >> i'll take the other side of that which is the revenue is what it is but the loss rate they were running at a rate of losing $3 billion a year before they gave us the first quarter in the s 1 and now it's up to 4 billion. you can't lose that many billions that often and be a sustainable company. i think that it's going to be difficult for them to control their pricing but it is possible for them to control their profitability. the stock has found its level, opened at 42, tried to rally up to 45, couldn't get there and has a middling score and usually middling scores stay where they are until the lockups. we think it will be stable but in the longer term, next quarter, quarter after that profitability rather than revenue growth is what we're looking at. >> stock price >> sort of if you don't get going in the right direction right away, like where you open,

which for these guys was 42, not 45 tried to find a level at 45 and couldn't if you're at 53, the question is does it get there in 12 months which is where everyone thought it would trade to on day one. >> maybe the bigger question is if you're not going to see any discounting in terms of pricing can they continue to grow? >> so that's the question, right? do you discount and take share at a loss or do you get rational and grow off a rational profitable base? >> what's more important >> i think for longer term investors they would say that market share is the most important. i do think that's the way this management team is leading one point on sort of the share price trajectory over the next 12 months is important for folks to realize that in the back half of this year comps on revenue get a heck of a lot easier, particularly for uber eats for example, last year uber eats entered 2018 growing their net revenues over 400% they exited the year growing 11%

w but you think profit is not the most important thing is expecting that for a very long time >> i don't know about a very long time but for the next quarter maybe two it will be revenue trends that carry the day. >> you sound very bearish. >> no. i think that we had a model running on this company for over three years. what the model says is it works in great weather when the competitors are blowing head wind on each other, then the unit economics go upside down and nothing makes sense so for us when we see rational units then it's just how many units will they do. >> now that lyft and uber are both public, will that help? they both have to answer to investors. >> you listen to the body language from dara, their long-term assumption is that the competitors will be rational, which means not forcing losses on all of the participants all over the world all the time. >> get in the cartel with us quickly. >> uber and lyft, so they're still fighting for shares. inside of their construct which is shares what people will look at rather than profitability

if you're losing $4 billion a year, you can't keep this up for frr. >> especially when you have to show the public markets how much you're subsidized. >> lyft decided to show less. >> do you think that was the right decision >> absolutely not. >> why would they hide that ball so that's one of the other things we're looking for other than the results for uber because we kind of know the broad outlines of what the results will be, they get to set the tone for what the disclosure will be. if they dial back the numbers they show investors, that will be a very worrisome sign. >> at least in the u.s., we're maybe starting to see signs that things are rationalizing a bit you mentioned the emails that you're getting and a lot of investors i talked to in the tri-state area are also getting similar emails lyft did talk about evidence or signs that incentives for attracting riders are starting to moderate, which we think that i think could be a result of the fact that both these companies

are public and that could start to help create an environment where they can start to approach profitability. >> how much you going to focus on uber eats >> i was going to ask, massively. very important obviously fastest growing part of the business. the fact that it's a multiproduct platform is a big part of why uber wants to get a premium multiple versus uber, so uber eats is very important. >> what about the development of subscription products, do you think that's coming? >> yeah, i think it is it's something they'll invest in it's small today not a needle mover but one way to smooth out the business. >> and loyalty that's the other piece. >> the way the model works on this is if they can compete with each other to attract customers who will then be sticky and rather than compete with each other for every individual ride, it's better for everybody. >> tom, rhett, thank you, guys. >> what's your rating? >> neutral on uber. >> what is your rating on uber

>> neutral. >> no. like a 4.5 >> i'm in a 4.3, i think i'm not sure what my problem is. i got to figure that out >> i'm higher than that. >> you have to take more trips >> apparently new york drivers relative to california -- california drivers uber drivers are much more inclined to give you a 5. new york drivers -- >> i would be happier if i was in california, too. >> it's a cultural distinction here >> the startups are the same way, rhett we like those projections. >> what's your uber rating >> 4.64. >> whoa. >> that's pretty high. >> i got to be a little nicer. there's a moment when you realize, oh, they rate us, too >> let's get back to what are we doing. let's get back to our guest hosts, richard fisher currently senior adviser at barclays and cnbc contributor gdp, we hear the two things are population growth and productivity and we hear that the really what

we're -- where we're stuck with those parameters is at 2%. so we have been above that, so i wondered, do you think there's a reversion or do you think the recent improvements in productivity based on tax reform or deregulation, is that something we can sustain and stay above what people say we're able to do, what do you think? >> technology plays a big role. >> in productivity >> and we're just learning how to harness that more and more and more we're fully employed you got to get more out of your workers. there's an incentive to do it. so i expect to have continued solid productivity this is a very squishy number, joe. it's very hard to measure. now, what's interesting if productivity is higher than we thought, then that means inflation is lower than we thought. >> why >> kind of what we have been seeing >> so, now, i don't believe inflation is driving the fed or deflation or is it above 2%. >> you don't >> no. >> no, it's not. >> we can't find the fill phills

curve. you still have to be wary of what your going to have, how many nuts in the tree do you have for when the winter comes. >> can we do 3% or not for sustained basis for gdp. >> i would like to think so. i think it's probably in the high 2s, but more than -- >> high 2s is good. >> remember secular stagnation, we don't hear from them anymore. >> i saw something -- >> the rest of the world is secular stagnation, we're not. that's why we're so bhood di attractive, makes the dollar stronger, money comes in here, doesn't go out. >> it's a sugar high. >> no, it's not a sugar high. >> they said it's been a two-year sugar high. >> at some point the cycle terms, joe, president trump has not conquered the business cycle. you have to have something in your pocket to spend to mitigate a downturn i hope, i hope the fed saves some of those nuts for when winter comes it will come. >> thanks for being here.

>> it was good to see you. >> big check from cnbc, buy a diamond necklace for your wife or whatever you want to do >> becky had warren on the stage? dallas as the only person who knew what was going on i'm retiring after that. you can't go up from there. coming up, wall street pointing to kind of a higher opening. green. little bit following yesterday's big slide. although if you watch yesterday is one of those sessions where there was a late comeback and worst case scenario didn't play out. we'll see what happens today what's fueling the little turn around of 20 points. facebook also under fire we'll find out if mark zuckerberg will respond at today's annual shareholder's meeting and what one shareholder thinks of the executives at the miaiaed gnt "squawk box" returns after a break. ♪ creating the perfect night...

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my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. ♪ markets hoping for a bounce after a stomach-turning day for stocks and bonds can investors find their footing? facebook under fire. the company holding its annual shareholder meeting today. this is nancy pelosi calls out the tech giant over a forged video. >> facebook, they are unwittingly exploited by the

russians, i think with itingly. >> we'll talk about what all the heat means for the company's bottom line. a long time ago in a galaxy far far away is about to become a reality. disney pulling back the curtains on a billion dollar experiment the final hour of "squawk box" begins right now ♪ >> announcer: live from the most powerful city in the world, new york this is "squawk box." good morning and welcome back to "squawk box" here on cnbc, live from the nasdaq market site. right outside of times square. the futures now dow indicated up 12 been up 60 or 70, been basically flat here we are in the green across the board. s&p is up under 3 and the nasdaq is indicated up just over 11

treasury yields, we just -- they're just words when you think about it, pretty deep 226. 226 on the ten-year. >> 7, 10 and 30-year bonds all had the lowest yields that they have seen since september of 2017 yesterday >> shri emailed me. >> what did he say >> because you were talking about him yesterday. >> i don't know that he heard. i called this and i should come on to talk about it. he'll come on next week. >> yeah. >> he should. talk about headlines informsers will talk about this morning, the first one boeing ceo apologizing to the victims of the two 737 max plane crashes, one in indonesia and one in ethiopia. mulenberg says he'll continue to serve as ceo >> think it would be appropriate to apologize personally apologize to some of the families >> yeah. i do personally apologize to the

families as i mentioned earlier, we feel terrible about these accidents we apologize for what happened we are sorry for the loss of lives in both accidents. we're sorry for the impact to the families and loved ones that are behind and that will never change that will always be with us. i can tell you it affects me directly as a leader of this company. it's very difficult -- >> how so? >> well, it gets to the core of who we are it feels personal. >> we were just talking about them in the last hour. you could see how the question was asked and some people not happy with his answer given that it appeared -- >> some people, who you? >> put me in the category, but there's other people -- >> are there because you mean individually? >> i think the question was you -- >> correct you said would you apologize to 300 people or 600 people, i think you might in this instance i think making a phone call or sending a letter to all 600

people given the responsibility of the company in this particular instance, this was not necessarily a pilot error situation, clearly this was something where the manufacturing of the plane and all the things we have learned since then in terms we learned behind it. not to say it's not a great company and hasn't done great things and most planes are remarkably in the sky each day. >> you want an individual -- >> i think that the question was would you -- >> semantics really. >> maybe when asked if he considered resigning from boeing mulen berg said it's important that he continue to lead the company. u.s./china tariff war, it will impose anti-dumping duties on chinese made mattresses duties could be as high as 1,731% stainless beer kegs hit with 79% tariffs. those products were being dumped in the u.s. at less than fair

value. we're now due for a key economic report coming in 30 minutes from now. second reading on first quarter gdp consensus forecast calling for annual growth rate of 3%, which would be down from originally reported 3.2% rate that number due out at 8:30. we'll watch it and bring you the analysis as it hits. >> futures pointing to a slightly higher open for the dow after pain in yesterday's trading session. dominic chu has more on some of the fallout from that. good morning again, dom. >> good morning. becky, it's not just yesterday, right, be this has been a month to forget so far, not a terrible one, but we're down across the boarded for major u.s. indexes dow industrials, the s&p 500, nasdaq composite, you're talking about 5 to 6% losses on a month to day basis so people talking about that whole sell and may go away trade. if you did that, if you were one of the folks that did, you're pretty happy about it. but still the major indexes suffering a pretty bad monthover

all for may. with regard to the thematic elements developing with sector moves, we're seeing a higher move in real estate specifically look at the real estate sector overall, the etf, it's only down .2% all 11 sectors down for the month of may energy, the outperformer, real estate, energy is down over 8% so energy, the worst performer, real estate the best performer, lower interest rates as well as the seeking of income. we'll watch those themes develop whether they stay that way for the summer one other place to watch, that is the russell 1,000 index and as you can see here, this is a year to date bases the year to date russell 1,000 overall is up about 11.5%. the russell 1,000 growth oriented index is up about 14%, outperforming. and the value ones are about 9%. what's curious about this, guys, among all three of these indexes, they are now down, you can see here, 5% on a month to

date basis so, the selling has been pretty even throughout growth and value across the broader large cap universe something to watch, andrew, as this trade plays out going into june, july and august, back over to you. >> thanks, dom want to talk more about the markets and bond yields. chief market strategist at td ameritrade, mike santoli mike, you're sitting right here so i'll go to you first. >> yeah. >> we're looking at these two different ideas. how correlated do you think the situation is >> which situation >> bomb stock markets. >> the low and ten-year treasury yield was at 11:54 a.m they both kind of built from there. and recovered with kind of narrower losses. so right now that's the game it's basically figuring out if yields have more downside to go

and will stocks follow. >> the stock market thinks the bond market is predicting a recession and those are the ones to follow? >> right i think the bond market is more the hedgehog versus the fox. so the hedgehog says, look, all we really care about is getting our money paid back which the treasury guarantees and what's inflation and growth going to look like, mostly inflation. i think that's what it is. but that's just tactics day to day. i think really what we're also doing now is figuring out in the stock market are we oversold yet, has sentiment become negative enough yet, tactically speaking are we going to that moment where it's like okay enough for now we discounted some greater risk. i think you would say getting there. i think after yesterday, lots of people buying downside protection, there's been this move down, but for a five or six percent move down it's not excessive, it's not extreme, extremes i go back to last june where we had a pretty good selloff and rallies into the high of september. that's the kind of readings we're seeing right now

>> jj, are you -- how worried are you about a recession in. >> not quite as worried in the near-term. one of the things i think that's also going on right now is many people are saying you know what, in many stocks it's been a decent year. i'm going to take some of that profit if i can and just put it in bonds as you said, you want to get your money back. it's almost like some people i think are suffering from tariff exhaustion, if you will. they're so tired of the day to day back and forth and, you know, one piece of news comes out we rally big another piece of news comes out the next day we go down small. i don't think we have got on the the point where people are yet bottom fishing so to speak one of the things that's also happening is when you look at the people who are going to sort of come in and buy what they think is a bottom temporarily or whatever, in the past it's been the fang stocks or the chip stocks that led us there right now there's no real sector where you say, okay, i'm pretty sure people are going to come in

and buy here if this particular sector or these particular stocks get to lows and i think that's the part that's a little more concerning to me right now. >> jnl, to the extent there will be bottom fishers, are there names people are touching? >> well, you know, i do think that one of the things we're seeing right now is actually any stock with decent dividend because the at&t, the verizons of the world, those blue chip stocks that have good yield in the nearer term people continue to buy because we don't see anything on the ten-year, at least in the short term that's going to pop these rates back higher so until then, people are going to look for yeemd wherever they can get it right now. >> on a short-term basis, i think we're now also looking to see if that particular trade, the kind of hiding and the defensive yield areas may be also playing out because you have seen utilities come off a little bit in the last couple of days and so you just sort of wonder if the pendulum has swung at one end or not that's what i think if you're looking for clues right now,

semiconductors are relatively strong so, yes, it's true there's no single kind of leadership group that you would say this is where everybody is going to flock and take the market higher. but you know, apple holds together, you have one day when the banks bounce because yields go higher and seem like the market is trying to stabilize. >> it's interesting while you were talking the dow implied open actually went negative which we hadn't seen yet this morning. >> you're going to blame me for that >> cramer predicted that a couple hours ago. >> yeah, it's a tentative. >> he said based on where oil is trading and some other things this morning you wouldn't expect to see that. >> you don't necessarily want to see that kind of meek, tentative bounce in the morning, that's ignoring what else is going on in the macro yes, if you want to see a real flush and people get kind of scared and create a slingshot effect to bounce higher, we haven't really gotten it yet you don't always get that. >> okay. >> one thing i would add also after level on s&p 500

yesterday, seems hard to believe we're not going to go back down and it's that. normally you don't bounce and go away you go down and test it the next day or two. >> nice to see you. >> thank you >> santoli santelli is coming next. in the run-down mike i noticed this was noteworthy, mike santelli, chief markets commentator. >> that is incorrect i think it's supposed to be senior. >> i thought there had been a change. >> i thought maybe i got a promotion. >> promotion you didn't know. >> i heard senior in the teleprompter, in the run-down, cbs nbc -- wow >> that means i would be the boss of all the other market commentators. >> you are the grand of markets commentators so to speak coming up, a live report

from galaxy's edge it's not as far as ewe think it's disney's new star wars themed fantasy land getting set to open in california. ask if investors are emparestimating the company's the rk business. stay tuned you're watching "squawk box" on cnbc puppy school is in session.

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welcome back, everyone disney's new theme park galaxy's edge will open tomorrow. a lot of people eagerly awaiting this park, julia. >> reporter: that's right, becky. i'm here inside galaxy's edge right now. this is the $1 billion expansion of disney's california park and disney ceo bob iger telling me he believes this will help grow demand for disney's park despite the fact that they raised ticket prices and this land will only have one ride at launch. >> when you can give people an immersive experience, which is what disney land was designed to be in the first place, but something that is as rich as

this, it heightens the whole experience for people in ways that i don't think were ever imagined when we didn't have the resources or the technology. and so, i think more than anything, people are going to just be awe-struck by how rich the experience is here >> reporter: disney worked for five years to create 14 acres that captures the look and feel of the star wars movies with star wars themed food and blue milk as well as an assortment of stores and an outdoor marketplace. the main attraction here is the millennium falcon ride which i checked out yesterday. it uses technology to put park visitors in control with the same ride launching when star wars lands opens in orlando in august this is just one of a range of new lands and attractions based on established franchises that are opening at other parks with lego movie world opened in florida in march, nickelodeon universe in new jersey in the fall and lions gate in the fall

in china all of these different companies are looking to tap into the growing market for theme parks it's a $20 billion annual business just in the u.s becky, back over to you. >> jewel yarulia, thank you ver. >> joining us is brett harris. brett, is this a situation where if you build it they will come >> yes, i think the disney has done a fantastic job expanding their parks business general you mentioned a number of the issues that they have, the galaxy, galaxy's edge, the star war's land that just opened is just another expansion of their parks. in addition to driving new attractions, they have done an excellent job driving pricing, specifically through keering their base price increased by low single digits but the upper end prices increased in the

teens generated a lot of top line growth for the parks. >> julia pointed out that the parks were doing very well even before this was added on you could say the same thing with universal's parks it seems like the more that's invested the more return a lot of these companies actually see. why do you think that is >> well, it's -- you know, the parks have -- >> sounds like we've lost brett on the line. he had been calling in to tell us more about this but again, the parks have been a huge revenue driver for universal and for disney been a big issue, galaxy's edge a few facts, again it opens may 31st which is tomorrow no reservations after june 24th. it is a little pricier, starts at $104 for adults and there's going to be another theme park that opens in august in orlando for disney world to have some of the same issues.

>> and you can build your own light saber which is the most exciting part. we built light sabers down in florida. this was not built yet you could -- >> it's the same thing. >> still get some of the stuff. >> these parks print money you have a situation where in harry potter you can get one of the wands. you spend 100 bucks or more to buy the wands. >> when your child says i need a light saber, you say okay. >> brett, let's get back to the point. >> i heard you talking about the wands at harry potter land, the star wars -- sorry, the light saber attraction retails for 200. so, again, they're doing a great job using the immerse i havimmi experience to drive engagement we have a hold recommendation on the stock. while the parks business is doing very well, the stock is going to trade off of the outlook for the direct consumer initiative so, of the $17 billion that

disney generates still about 8, 8.5 comes from their legacy media network, espn, abc, the disney channel facing the same secular pressures as the rest of the ecosystem and the big move in the stock price was around expectations around their disney plus, their direct to consumer streaming service that's set to launch in november so from a stock perspective, we expect the outlook around that and then subscriber growth in 2020 around the disney plus to really drive the stock. >> you have a hold because you are dubious about what they'll be able to do with direct to consumer or because you think the stock is already priced in a positive reaction to that? >> yeah. the stock is already priced in quite a bit on the direct to consumer product so, disney doesn't -- the company itself doesn't believe the streaming services hulu, espn and disney plus are going to be break even until 2024.

and if you put some reasonable multiplies on the parks, on the studios and on their legacy media networks, the market is factoring something like 60 to $70 billion value in for the direct to consumer side, which could turn out to be the right valuation at this point. netflix's market cap is worth 160 billion today but there's a lot baked into the price of disney a lot of expectations around disney plus, even the company doesn't think it's going to be break even by 2023, 2024 >> brett, thank you for joining us today it's good to see you or good to talk to you, i should say. >> thank you. >> what's a light saber? >> big thing >> when my kids were little, we had the big plastic ones you press and they were lit. >> yes. >> they were stupid. they were just plastic. >> what is this -- why is it 199? what does it do? >> i believe two things. one, it's much more intricate in terms of lights. it doesn't do the full light thing. you can use it throughout the

park. >> it's like the wands for harry potter you can use interactively. >> apparently wasn't the size of the wand that mattered, it was the different functions that the wand made. >> yes you could walk through the park. if you do a movement like this you may turn on water. if you do this you turn on lights. >> they're all standard. >> no. >> okay. then it could be any way, coming up, facebook gets set to face shareholders for its annual investor meeting. some aren't happy with mark zuckerberg's control of the company. and the u.s. speaker of the house isn't happy with how facebook handled a doctored video of her that went viral >> we have said all along, oh, poor facebook. they are unwittingly exploited by the russians. i think wittingly because right now they're willing to put something on that they know to be false when we come back, we'll talk to a facebook shareholder about government scrutiny. the company's direction under zuckerberg and the current price of the shares.

stay tuned you'reatin"sawbo wchg quk x. on cbs

welcome back to "squawk box. take a look at the futures right now. we'll show you what's going on the whole world may change -- not the whole world. in an hour we'll see where things really land in four minutes we'll see what's going on with gdp. dow jones 28 points.

s&p 500 up about 5 points. joe? coming up, you love to see them fight, but that's when there's 800 miles in between them today they're side by side, so we'll see if they can get along. steve liesman -- here we go. they have been -- wow. this is going to be good mma, mma we decided on is a format, mixed martial arts. >> jerry springer coming >> respond to the latest economic data as well. the first revision of the first quarter of gdp earlier we said second we'll have the numbers in a minute why did we say second last time? get it! crowd chanting: get it! get it! get it! (crowd groaning) (crowd cheering) narrator: give your town a reason to celebrate because every goodwill item you bring home, brings job training and more to your community. goodwill. bring good home.

♪ welcome back to "squawk box. breaking data. we have the annualized gdp number, 3.1% up from expected 3.0. but a little worse than last month which was 3.2. we have personal consumption also a beat came out at 1.3 from expected 1.2 price index comes out plus .8, a little worse than what was expected plus .9 these are a little less important numbers expected 1.3 jobless claims another important one 215,000 which is near where it was expected 214. still near historic lows

at least 50-year lows there. continuing claims came out 1.657. a little bit higher than 1.66 -- little lower actually. next one is wholesale inventory. that doesn't come out. the reaction is the stock market likes it a little bit. i actually thought if these numbers came out good the stock market would ignore it as back ward looking data and concentrate kind of what's had them in a bad mood which is the trade dispute. the ten-year when we started was 2.255, now it's 2.249. so not much of a move there. back to you, joe >> jim, joining us now live on set, cnbc senior economics reporter steve liesman you're not chief yet. >> no. >> santoli was almost chief. >> and our own rick santelli here is the number i tried to get richard fisher to tell me something, rick

santelli, that is whether deregulation, tax reform, just being less -- taking the yolk, the obama yolk off of the private sector will that allow the economy to really grow at 3% or in steve's view he argues that 2% is all we're really capable of doing because of population and because of productivity? >> can i amend that slight mischaracterization? i think all that is worth something. i think it's worth .3 to .5. >> can we do 3% ever if you -- >> i think 3 is hard i have done the math on that, joe. >> he says we can. >> it's tough to get there. >> why do you say we can't how is he wrong about underestimating the american -- [ laughter ]. >> what? >> because i think all the issues you brought up are going to give the momentum back to the economy. i think the micro managing listen, i know it's political season joe biden is saying that they planted the seeds. okay they didn't plant the seeds.

we didn't have much -- >> stepped on the seeds. >> what we have now is due to simple things, yes, regulation, every source i talked to, these things are underestimated and tax reform, yes, gives you that one, big jump. but it's going to continue to keep on giving overtime. i think capital investment which has been on the stingy side, i see that as the new silver bullet. >> steve tells me that job growth in the obama years, that's when it all started and it was actually better than it is now and that -- >> no. >> if that is your -- >> i didn't say that at all. >> if that is your foot on the neck of the private sector, why did the stock market do so well under obama? why you saying the yolk -- >> it's across the creek across the creek markets have a tendency to heal themselves and politicians take credit for it. >> do you think corporations were during those eight years were -- did they have a tough go of it with all the regulations and obama care and the higher taxes? >> yeah, about as tough a go as

they're having now with tariffs and the trump administration's interventions into capital and private markets. >> i used to do this in chicago. i'm going to do it in new york. >> oh my goodness gracious. >> the last administration was this okay >> right. >> i'm not talking politics. if you want business to do well, you don't pick on them you don't try to make their life miserable and you don't attack banks because attacking banks would be like taking the transmission out of your car, putting it in drive and then wondering why you're not going anywhere. >> your expression was better than it was in the past. but still looks like you ate something from the cow pasture. >> i recall the last administration acting to save the banking system am i missing something >> yeah. you don't save the banking system -- >> am i missing something? >> it's working. >> you don't save the banking system -- >> rewrite history here? the last administration saved the banks. >> we're giving history a chance to show its face in public. >> i can tell you from personal experience that the last thing the obama administration wanted

to do was to save the banking system it is exactly what they were forced to do and i think it's what they did. so, i think you're re-writing history. >> you realize we're back in middle school and joe is yelling fight, fight, fight from the sidelines. >> so does that mean that i can take my macaroni and cheese and throw it across the table here >> yes. >> food fight. >> i'll give you one final thought. >> final, we have time >> i'm used to two and a half minutes is all i get >> that's when leesman hasn't cut your mike off. >> it's not -- can i just point out the problem here is not between me and rick, okay? >> i'll be the judge of that >> when the market has a big break, like it did in '07, it usually comes back it's to cross the creek. as a matter of fact -- >> reagan years? >> yeah. this is where we vehemently disagree you wanted people to feel the pain. >> if nobody tinkered with

anything, the stock market would have bounced back just like a beach ball under water it always does and they always overreact and everything they do -- >> right. >> has a half-life that's twice as long as it should be. >> rick, i would be happy to sit here and debate the past i'm pretty sure our viewership -- >> let's talk about the future let's talk about the future. >> let me throw a question at you right now. >> all right. >> the market is good, darn sure that the rate the fed is going to cut rates and it's pricing in -- it's your market your boys inchicago and girls suppose there's a few of them, that have a quarter point built in for '18 and they're talking about three quarters for '19 and three quarters for' 20 are they right on this are they wrong why are your market boys out there basically building in fed rate caught cuts for next year >> they look at the market and they suspect that the fed is paying much closer attention to the market than any of the fundamentals >> too close attention.

>> i don't think too close i think they need to observe it but they can't be trigger happy here my feeling is if the nextthree days we saw 5% rally and all the stock indexes -- what do you think fed funds would price in >> they would probably go the other way. >> that's my point it's a very static, accurate picture today. >> i got to cut this off >> we don't disagree too much about right now, i don't think that's the difference. >> to give investors this much and take this much now they look six meetings out and think they know what they're talking about. >> you should have seen joe's face a moment ago. >> the problem is that the fed needs to listen to markets, but it can't be overly attentive, right? i think there are guys out there saying the markets are screaming for a rate cut. >> intention but not necessarily too much attention >> i'm not going to comment on that because it only could mean trouble for me if i were to agree or disagree with you in either way let me ask you this question,

because ultimately it's a question about the economy and it really gets back to what joe was talking about. you remain optimistic that at the current funds rate, right, we can get to 3% growth, i'm told, to pause. >> actually guys breaking news. president trump leaving the white house this morning he's on his way to colorado where he will be addressing the air force graduation ceremony today. but he spoke to reporters on the lawn just moments ago as he was leaving. listen in. >> beyond any expectations, unemployment numbers are just about the best in the history of our country. employment numbers are the best. we have close to 160 million people working today which is more than we have ever had before i'm going out to colorado today to give the commencement address

for the air force, which is actually very exciting for me. it's an amazing place. these are great people so i look forward to doing that. any questions? well, i think it was the same as the report there wasn't much change it was to me the same as the report and there's no obstruction you see what we're saying. there's no obstruction there's no collusion there's no nothing it's nothing but a witch hunt. it's a witch hunt by the media and the democrats. they're partners it keeps going i thought it was finished when the report was released, but it goes on. and to me it was the same frankly as the report -- and he said basically it was the same as the report. i think he's totally conflicted because, as you know, he wanted to be the fbi director and i said no. as you know, i had a business

dispute with him after he left the fbi. we had a business dispute. not a nice one he wasn't happy with what i did. i don't blame him but i had to do it because that was the right thing to do but i had a business dispute. and he loves comey you look at the relationship that those two so whether it's love or deep like but he should -- he was conflicted look, robert mueller should have never been chosen because he wanted the fbi job and he didn't get it and the next day he was picked as special counsel. you tell somebody i'm sorry you can't have the job then after you say that he's going to make a ruling on you. doesn't work that way. plus, we had a business dispute. plus his relationship with comey was extraordinary. now, one other thing i'll say, why didn't he investigate page and mccabe and comey and all the

lies and brennan and the lies and clapper and the lies to congress and all of the things that happened to start this investigation? why didn't comey come clean? why didn't comey come clean and say the things that he knows are fact why didn't mueller investigate comey, his best friend or his very good friend and there are so many other things here is a question, this is a study of russia. why didn't they invest the insurance policy in other words, should hillary clinton lose, we got an insurance policy guess what, what we're in right now is the insurance policy. i think he is a total conflicted person i think mueller is a true never trumper. he's somebody that dislikes donald trump he's somebody that didn't get a job that he requested that he wanted very badly. and then he was appointed.

and despite that, and despite $40 million, 18 trump haters including people who worked for hillary clinton and some of the worst human beings on earth, they got nothing it's pretty amazing. no, russia did not help me get elected. you know who got me elected, you know who got me elected, i got me elected russia didn't help me at all russia, if anything, i think helped the other side. what you ought to ask is this, do you think the media helped hillary clinton get elected? she didn't make it but you take a look at collusion between hillary clinton and the media. you take a look at collusion between hillary clinton and russia she had more to do in the campaign with russia than i did. i had nothing to do. and by the way, that's one other thing, if you look, this was all about russia, russia, russia, they don't talk about russia

anymore. because it turned out to be a hoax it was all a hoax. and then they say, gee, he fought back. isn't that terrible? he fought back of course i fight back because it was a false accusation, a totally false accusation and it's a disgrace. and it's a very sad period for this country and i think in the end i will consider what's happening now to be one of my greatest achievements, exposing this corruption >> do you think they're going to impeach you? >> i don't see how they can because they're possibly allowed although i can't imagine the courts allowing it. i've never gotten into it. i never thought that would be possible to be using that word to me it's a dirty word, the word impeach it's a dirty, filthy, disgusting word and it had nothing to do with me. so i don't think so because there was no crime you know, high crimes and not

with or or, it's high crimes and misdemeanors there was no high crime and there was no misdemeanor so how do you impeach based on that and it came out that there was nothing to do with russia. the whole thing is a scam. it's a giant presidential harassment and honestly, i hope it goes down as one of my greatest achievements because i have exposed corruption, i have exposed corruption like nobody knew existed [ inaudible question ] >> i think we're doing very well with china i want to shake your hand. come here. you tweeted me fairly. thank you. thank you. wait wait i want to ask a real reporter's question we're going to ask a real

reporter's question. okay china would love to make a deal with us. we had a deal and they broke the deal i think if they had it to do again they wouldn't have done what they did. we're taking in billions of dollars in tariffs china is subsidizing product so the united states taxpayers paying for very little of it if you look at inflation, and if you look at pricing, it's gone up very little the tariffs are having a devastating effect on china. people are fleeing the country with their companies these companies are leaving for vietnam, other parts of asia and they're even coming to the united states because then there's no tariff. i think we're doing very well with china we'll see what happens but i can tell you, china very much wants to make a deal because the companies are leaving china to avoid the tariff china is becoming a very weakened nation.

just as iran has become a very weakened nation. and iran wants to make a deal also say it nigel firajh is a friend of mine boris is a friend of mine. they're two very good guys, very interesting people nigel picked up 32% of the vote starting from nothing. and i think they're big powers over there i think they have done a good job. well, i like them. they're friends of mine, but i haven't thought about supporting them maybe it's not my business to support people, but i have a lot of respect for both of those men. >> do you think it is fair -- do you think it's fair to the sailers of john mccain they were banned from hearing you speak same pli because -- >> i don't know what happened. i wasn't involved. i would not have done that i was very angry with john

mccain because he killed health care i was not a big fan of john mccain in any way, shape or form i think john mccain had a lot to getting president bush, a lot to do with it, to go into the middle east which was a catastrophic i would never do a thing like that now, somebody did it because they thought i didn't like him, okay and they were well meaning, i will say i didn't know anything about it. i would never have done that >> do you owe mccain an apology? >> we had a tremendous group of sailers from various ships it was a beautiful day but the mccain thing i knew nothing about. >> well, i think i have been much tougher on elections than president obama. president obama was told in 2016 just before the election in september that russia may try

and interfere with the election. he did nothing and the reason he did nothing is he thought hillary was going to win. we are doing a lot and we're trying to do paper balance as a backup system as much as possible because going the good old fashion paper in this modern age is the best way to do it [ inaudible question ] >> well, i think we want to have a relationship with russia and china and everybody. i have said that for a long time getting along with russia, getting along with china is a good thing if we can do it on fair terms or our terms. well, venezuela, we're just on watch. we'll see what happens i would love to see them work out their problems i understand there are a lot of talks going on, but i'm all for the people of venezuela.

you know that probably better than anyone. steve, go ahead. [ inaudible question ] well it's too bad what happened in israel. it looked like a total win for netanyahu. a great guy. he's a great guy and now they're back in the debate stage and they're back in the election stage that is too bad. because they don't need this i mean, they've got enough turmoil over there it's a tough place i feel very badly about that it looks like they're talking. but more likely they'll have to go back into election mode >> the mueller report says trying to help you and hurt hillary clinton. was mueller wrong about that >> i believe that russia would rather have hillary clinton as president of the united states than donald trump. the reason is nobody has been tougher on russia than me. whether it's our energy policy which was not her's. whether it's the pipeline as you know in europe going all over

the place that i've been bitterly complaining about, whether it's ukraine, whether it's o whole host of things, there is nobody ever been more tough or difficult for russia than donald trump. now, i have to tell tell you tht sanctions on russia at a level that nobody has seen before. nobody wants to write about it with all of that, i want to get along with russia and i want to get along with china and i want to get along with europe i want to get along with everybody if it is possible. i even want to get along with iran and iran wants to talk and if they want to talk, i'm available. thank you. [ inaudible we'll be meeting with irish

officials and it will be an overnight stay and i look forward to that. [ inaudible question ] i can't because i didn't know anything about it. we'll probably be able to find out who did it they thought they were coming me a favor because they know i'm not a fan of john mccain john mccain killed health care for the nation i disagree with john mccain and the way he handled the vets. i was able to get choice i disagreed with john mccain on the middle east. he helped force bush to make a very bad decision and go into the middle east. so i wasn't a fan of john mccain i never will be. but certainly i couldn't care less whether or not there is a boat named after her father. [ inaudible question ]

there were no charges. none if you look at bill clinton, that very nice gentleman who has been so much on my side as you know, his special prosecutor, it was guilty, guilty, guilty, guilty so many guilties with me, there was no guilty number one, there was no crime and number two, i fought back. and i'll tell you -- wait. wait wait there was no collusion there was no collusion read volume one. there was no collusion [ inaudible question ] that means are you innocent. that means you are innocent. excuse me. then he should have said you're guilty [ inaudible question ] that is wrong. that is wrong. because he said it -- he said it differently the first time so he said essentially you're innocent i'm innocent of all charges. and you know the thing that nobody brings up, there was no

crime. they are saying he is obstructing something and there was no crime nobody brings it up. also some day you ought to read a thing called article ii. read article ii. which gives tves the president s that you wouldn't believe. but i don't even have to rely on article ii there was no crime, no obstruction, no collusion, no nothing. and this is from a group of people that hate me. if they only found anything, they would have had it and he knows that better than anybody. [ inaudible question ] no crime, no charge, because he had no information >> do you agree with louisiana's ban on abortion at six weeks >> we'll have a statement about it and i'm also going to have probably today a major statement on the border. this is a big league statement but we are going to do something

very dramatic on the border. because people are coming into our country, the democrats will not give us laws, they will not change laws. they will not meet, they will not do anything. they want to have open border, they want to have crime, they want to have drugs pouring into our country, they want to have human trafficking. i'll be making a statement probably tomorrow, but maybe today. [ inaudible question ] no, i'm not closing the borders. i'm doing something else we'll be having a major statement on the border sometime later today or tomorrow. it will be a statement having do with the border and having do with people illegally coming over the border. and it will be my biggest statement so far on the border we have brought something to the light of the people. they see now that it is a national emergency and most people agree that the democrats agree too, but they won't give us the legislation you need to fix it

right now when you catch somebody, you have to release them they won't give us the legislation. whether it is chain migration or whether it is lottery, they won't give us any -- and the asylum procedures are ridiculous no place in the world has what we have in terms of ridiculous immigration. so i will be making a major statement. i would say my biggest statement on the border probably today or tomorrow thanks >> again, that is president trump making some comments as he is getting ready to leave for colorado where he will be addressing the air force graduation eamon javers is standing by in washington and i guess the most important thing he was saying for our audience might be related to china and that he thinks they want to do a deal. >> yeah, he's said that before and he continues to say that there is no real evidence though that we're seeing any progress

behind the scenes in terms of getting to that deal so we'll wait and see whether the white house can make any announcements around that. meanwhile just a remarkable couple of minutes here between the president's twitter 2350feed the president live on the south lawn just before coming out there, the president suggested i had nothing to do with russia helping me to get elected. that caused a stir when the president tweeted that out because it was the first time we've heard the president acknowledge that russians did in fact help him win the election that would be a remarkable admission from the president who has all along -- the white house has said that the russians were involved in the election but didn't make a difference in the election ultimately. the president has said might not have been russia at all. and then we hear the president go back out on the south lawn just about 20 minutes later and clean that up and said no, no, no, russia had nothing to do with the election, i got me elected. but the white house still has not deleted the president's tweet. so miscommunication there from the president ultimately sending

the mess aenlg waage about the statement yesterday, that this is nothing but a witch hunt and i wishes it would go away and that he can focus on his agenda including venezuela, china and other issues >> all right thank you very much. rick and steve are still here. we never got a chance to talk about some of the actual data that came out. what do you think based on what we heard today >> real quick, i think that there was something out there expecting more of a downward revision very slight sort of up side to the real final stuff that matters and some of the down side on equipment spending was lower. i think that it is a wash and i've seen some reports that some guys are downgrading the second quarter because of it. but i'm going to hold out judgment and come back later and see how the he rrevisions happen >> and i think it is unbelievable that the revision held on to that three handle steve, you know better than anybody, historically what is the weakest? first quarter. we are way off on pre-dinktsipre

first quarter. even saying it is only inventory building but i think that it has a lot to do with the trade issues but many countries are getting around the trade issues. i think that we are whittling down the trade inventories i think that it is a terrific number for first quarter and i do see second quarter a bit weak but still a bit of time to resurrect it >> what do you think about what we've seen in the treasury markets, 2.2% on the ten year? >> it is planting many seeds of discontent in all global investing. dropping rates is never a good thing. many just don't believe that you want rates to be going up if you are long stocks, you want the economy beicooking. this helps the met drinks for stock pritszicing in the futureu in the end i think a third of the yield drop is global and domestic economy which is weakening a bit, but i think the

overwhelming majority of downward rates is pressure from other central bank what is they have done to their sovereigns. and jay powell and whatever they do can't beat a minus 18 basis point boom >> i was sure we would get a one handle in the first quarter and now i'm sure that we will get a one handle in the second quarter. >> i think that it will be closer to two. i don't think that it will be three this quarter, but i think is that -- >> a shocker last quarter. >> i believe in the 3%, larry 3% i don't think that it will be -- >> larry summers >> oh, god, no he is looking for half of 1% >> larry kudlow. >> and i know steve says anything over 2% is a big bonus. we have to quit thinking that way. we have to get people to realize -- >> we have 35 seconds, but tell me where you get it. because the math is very simple. >> how did we get this quarter >> you really want to know i'll tell you. you asked. 1% from the change in exports. that is people bringing stuff in

ahead of time. and i'll tell you what inventories added, 0.6 so 1.5% of your 3% was from trade and inventories. you tell me where we'll get it from productivity or hours worked >> hold on to those numbers. because you will find something to pull out to make it less. >> i will not. i will not i promise you i won't. if there is a real change in underlying gdp, i will get on the rooftops and i'll scream it. >> time for squawk on the str t street ♪ i got to have faith, because got to have faith, faith, faith, i got to have faith ♪ good thursday morning. welcome to squa"squawk on the stree street". futures are indicating some stability after two rough days we got a more retail earnings in kn